Employing a Family Member – Personal LTD Company

The employment of a family member or spouse is a question that commonly arises.
Below are the FAQ’s in relation to the employment of spouse or family member.

Am I legally allowed to employ spouse in my company?

Yes, there is no legal impediment to stop you employing a spouse or family member, it is up to the Directors to decide who they employ. In many cases a spouse may be a fellow director. However, the sole purpose of the expense must have been for the purposes of the business.

How much can I pay them?

Whilst it is up to the directors to decide, Revenue say that:
“Where the duties are genuinely performed remuneration is commensurate with the work and time devoted to the tasks”

A good question to ask is:
“How much would I state as salary if I was to advertise the role?”

What rate of PRSI will my spouse pay?

Generally, your spouse will pay Class S PRSI, therefore it’s not considered
to be insurable under Class A and no Employers PRSI is liable.

Does my Spouse or family member get the Employee Tax Credit?

No this is not available to them; however, the will be entitled to the Earned Income credit. This is €1,350 in 2019 (Employee Credit €300)

Is my Spouse Obliged to file an Income Tax return?

Only if they are director and control more than 15% of business, in many cases they will be assessed under the joint assessed system with you.

Can Revenue Review the wages paid to a spouse?

Yes – Revenue will want to make sure that a payment is going to the spouse and not the individual.

How do I ensure I am Revenue compliant when employing a spouse?

• Draw up a job description of their role and duties
• Agree a salary commensurate with the role.
• Ensure the payment is made to Spouse’s bank account or a joint account held by you both.